Visa Interchange Rates: Everything You Need To Know

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Visa is undoubtedly one of the most widely accepted credit cards globally. By accepting Visa, customers can pay online, by phone, or in-person. During the payment process, there are fees that the merchant will incur, known as the visa interchange rates

These are transaction fees paid through your bank account when using a debit and credit card to buy a product from a physical or online store. If you have a brick and mortar or online business, you’ll have to pay a fee for each transaction you’re processing whenever you sell your products or services. 

Visa fees are paid to the issuing bank to take care of handling charges involved in the approval of payments. These handling charges include debt and fraud costs. 

Interchange Fees Are Dynamic 

Visa interchange rates face regular adjustments and changes. It all revolves around the cost of moving time value and money. Many factors determine these fees concerning the different risk factors involved in the process and current interest rates. 

This explains why Visa makes modifications to the interchange rates regularly. For example, Visa changes their prices in April and October. Merchants have to pay for the facilitation and privileges as they make sales via credit and debit cards. Out of all the fees that merchants incur, interchange fees are the largest ones. 

What Are Visa Interchange Fees Charges To Businesses? 

Any merchant that accepts Visa has to pay the set minimum percentage of interchange fees for each transaction. Payment processors or card-issuing banks may charge it. Moreover, your bank and Visa may charge these fees. 

Normally, the charging bank sends you the charges as a single bundled amount on your bills. After that, the payment processor hands you the bill. Additionally, the payment processors will make the whole process straightforward since, in reality, you’ll pay over 200 individual interchange fees, which are rolled up in a single interchange fee. 

Again, this simplifies the process since the payment of different charges is made on a single bill. 

Factors That Influence The Interchange Rates 

There is a myriad of different transactional factors influencing interchange rates. It’s worth noting that each element discussed below affects how a specific card company determines the fees. 

Transaction Types 

Your transaction type is a crucial factor that determines the exchange rates. It’s important to note that point of sales transactions carry fewer risks than Card Not Present (CNP) payments, and here’s why: a chip can be scanned, and one can take a signature or enter a pin. 

Typically, exchange rates for transaction types that are significantly less risky have lower rates. The CNP and mail order telephone order (MOTO) is classified as a card-not-present payment category. 

This is why the payment processing and credit card companies charge higher Visa interchange rates for such types of transactions. 

The Size and Volume of Business 

Industry and business size are other important factors for determining the rates. Each business has varying rates that differ from their store. Likewise, your business volume and size also play a crucial determining factor. 

If your business is small, your rates will be different than that of a big corporation. Additionally, larger business setups incur lower rates since they have enough collateral. They can quickly negotiate with credit and debit card companies and get reduced rates. It’s worth noting, however, that not all eCommerce stores can get discount rates. 

Debit Card Pins 

Compared to a credit card, debit cards with pins offer a reduced interest rate, thanks to smaller risk factors. When we refer to lower risk, this means that the company will not have to deal with countless complications because of payment processing. 

Additionally, all credit card companies have different rates. So, card type plays a vital role in determining the Visa interchange rates. Reward cards pay for benefits given to cardholders by charging higher interchange rates to businesses and merchants. This proactive step may motivate and induce consumers to purchase more.

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